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In an attempt to avoid higher taxes, and to exploit the different treatment of stock trading between banks and non-banks, many investors have been transferring their stock portfolios from their managers, who are stock exchange members, into the hands of banks.

These sales avoid the capital gains tax (of 15 percent on profits) and are instead liable to turnover taxes (1 percent on size of deal), which can be considerably cheaper. The transfer is technically not difficult and is profitable for the investor, but leaves the stock exchange member as the loser.

Non-bank exchange members have appealed to the Income Tax Commissioner to allow their clients to chose which tax route their portfolios should have - the capital gains tax, or the turnover tax. A spokesman for the commissioner replied that the request had yet to reach them, and would only then be discussed.

From the beginning of this year, non-bank stock exchange members such as Ilanot Betucha, IBI, Menora Gaon, Nessuah Zannex, Harel Capital Markets and Migdal Capital Markets all moved to the capital gains tax route. The banks, claiming their computerized systems for collecting the tax will take far longer to set up, decided to levy the alternative, and temporary, turnover tax, and were given until the end of the year to fall in line. The recent jumps in stock prices has made the turnover tax more attractive to the seller.